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Commercial landlords in New York often find that their efforts to evict defaulted tenants are frustrated when, after serving the defaulting tenant a notice to cure, the tenant obtains a “Yellowstone” temporary restraining order (TRO) pursuant to First National Stores v. Yellowstone Shopping Center, 21 N.Y.2d 630 (1968). As discussed below, a recent New York decision may allow a landlord to avoid a Yellowstone injunction by including lease language waiving the tenant’s rights to declaratory and injunctive relief.
As many commercial landlords know, once a landlord serves a tenant with a notice to cure a lease default in advance of terminating a lease under New York law, a tenant can apply for a Yellowstone TRO, which extends the cure period available to the tenant, and delays lease termination and physical eviction while a commercial lease dispute is pending. Lease disputes in these circumstances typically relate to whether the tenant has defaulted under lease. If certain conditions are satisfied and a tenant is successful in obtaining a Yellowstone TRO, the tenant will be able to use the time while the lease dispute is pending (which could be many weeks or months) to cure the breach of the lease, as opposed to only having the period provided for in the lease, which is often substantially shorter. Thus, even if the tenant loses the lease dispute many months later, it may be able to avoid eviction if it cures the alleged breach while the dispute is pending. By contrast, without a Yellowstone TRO, the landlord can terminate the lease and complete the eviction as soon as the cure period expires, provided that the lease default remains uncured at that point in time. Therefore, avoiding a Yellowstone injunction can mean the difference between successfully evicting a tenant or not, being able to complete the eviction on a timely basis, and preserving settlement leverage for the landlord if a negotiated resolution is possible.